The strength of demand for titanium dioxide (TiO2), the
white pigment used in a wide range of coatings, paper, plastics
and inks, is considered a lagging indicator of global economic
Rising wealth drives higher demand for manufactured goods and
fuels construction activity, pushing pigment prices
But TiO2 producers have reported that prices for the
chemical, which languished though 2015 and most of 2016, have
outpaced global economic growth this year, thanks to a slowdown
in Chinese production and some bottlenecks in European
IM’s spot price for pigment-grade TiO2 in
northern Europe rose to €2,765-3,190/tonne
($3,306-3,815/tonne*) in May, a two-year high, and have held
at that level through the summer, when buying traditionally
slows to a crawl.
Spot markets in Asia have also bounced to a two-year high of
$2,700-3,100/tonne (CFR Asia).
"Demand for TiO2 tends to be inline with global GDP growth,"
Mark Vergano, CEO of US-based chemicals manufacturer The
Chemours Co., told investors in August this year.
"However, this year our demand has trended above GDP in the
high single digits - a result of market supply tightness," he
The rise in prices comes at a time when the
world’s largest TiO2 producers are undergoing
major restructuring, with some deepening their presence in
the pigment sector, while others are looking to insulate
themselves from a historically cyclical market.
Chinese clampdown slows supply
A major drag on TiO2 prices in recent years has been the fact
that China, a huge consumer of the chemical, has swung from
being a net importer to a net exporter, as local production
But Chinese TiO2 producers have been under pressure from
tighter emissions regulations since the start of the year,
thanks to Beijing’s growing determination to clamp
down on pollution.
Industrial pollution is a hot political topic in China, with
frequent protests and petitions over air and water
This situation has spurred the government to take action,
sending teams of specially appointed inspectors across the
country, bypassing local governments in order to enforce
stricter pollution controls.
Repeated inspections in the main TiO2-producing region of
Sichuan meant that Chinese TiO2 companies there were operating
at just 50% capacity on average over the summer, due to
Chinese TiO2 production has traditionally been dominated by
the cheaper sulphate-route product, which principally uses
locally mined ilmenite as a feedstock.
But the country’s government has committed to
switching predominantly to chloride-route TiO2 production,
which is cleaner and yields a higher-quality end product, over
the next few years. As well as being less polluting,
chloride-route product commands higher prices in Western
Further environmental controls from the central government
may be on the cards. At the end of June, a new director of
China’s Ministry of Environmental Protection,
Jiegan Li, was appointed and immediately ordered a renewed set
of inspections covering all of China’s provinces
that may continue until year-end.
According to the China TiO2 Association, tightening
environmental regulations are having a knock-on impact on
downstream TiO2-consuming industries, including coatings, ink
and paper manufacturers.
Coating companies have been among the worst hit, facing both
increased raw material costs and weaker demand from buyers.
Chinese TiO2 producers announced another round of price
increases in September, citing rising raw material costs and
environmental pressures, with leading supplier Lomon Billions
Group hiking its prices for the seventh time this year.
Some companies are also requesting advance cash payments of
up to 30% of the total order price in order to secure
At the end of August, Lomon Billions announced that its
orders were fully booked until the middle October.
In September, the company stated that 30-40% of its
production was affected by environmental inspections at its
Deyang base in Sichuan province, but said that all of its other
production centres were operating at full capacity.
In Sichuan, pressure from inspection teams and provincial
government officials on ilmenite and TiO2 producers has
reportedly forced the closure of some facilities. How much
capacity can be bought back online, and when this can take
place, remains unknown.
Shandong province, another of China’s major
TiO2-producing regions, was also affected by environmental
inspections in August, with the results yet to be
The drive to rationalise the industry has driven smaller
producers to shut down at a rapid rate.
The squeeze on Chinese domestic ilmenite production is
encouraging even the biggest vertically integrated TiO2
producers to secure raw material overseas. In August, Lomon
Billions signed a memorandum of understanding with Brazil
Mineraçáo Santa Elina Group, to supply it with
up to 400,000 tpa of ilmenite from its RGM project over 20
Reduced supply of Chinese TiO2 has helped boost prices in
Western markets. Demand in Europe has been helped by the recent
recovery in the continent’s economic growth, while
local supply bottlenecks have also supported TiO2 prices.
At the start of 2017, a fire at US producer Huntsman
Corp.’s Pori TiO2 plant in Finland put the
facility out of action. The plant, which supplies around 10% of
total European TiO2 demand, is not expected to return to full
capacity until the end of 2018.
The increase in sales prices helped European producers book
rising revenues in the first half of this year, adding further
momentum to a wave of mergers and acquisitions (M&A)
currently under way.
In August, Huntsman completed the US listing of its UK-based
pigment arm, Venator Materials Plc, raising $454m.
Huntsman has retained a majority stake in the new company,
using the proceeds of the float to pay down debt, as it is
itself acquired by Switzerland-based chemical company
At the time of Venator’s listing,
Huntsman’s CEO said the deal would help boost
value by carving out the historically volatile TiO2
Chemours, which was spun out of US chemicals firm Du Pont de
Nemours in 2015, has seen its profits boom in the last year
after initially struggling with low TiO2 prices.
While Huntsman and DuPont have attempted to insulate
themselves from the vagaries of the TiO2 market, others have
doubled down on the sector.
In September this year, US-based Tronox Ltd announced the
completion of the $1.3bn sale of its alkali business, a move
intended to help fund the acquisition of leading Saudi
Arabia-headquartered TiO2 producer Cristal Global.
There has also been speculation that Lomon Billions, which
was formed last year when Henan Billions Sichuan Lomon Co.
merged, is seeking to buy TiO2 businesses outside China,
further consolidating the industry.
The question facing TiO2 sellers, both in Asia and in
Europe, is whether demand will pick up enough to sustain recent
price rises, if and when supply recovers. As the northern
hemisphere summer comes to an end, the direction TiO2 prices
move in will depend on how aggressively buyers return to the
Producers in China, at least, appear optimistic. In a recent
report to investors, Lomon Billions forecast rising sales in
the coming months, as downstream customers have limited
inventories after clearing supplies over the summer.
European producers, meanwhile, will be poised to see if the
market can continue outpacing economic growth, or whether the
newly restructured industry is able to ramp up supply to ease
shortages and bring prices back down.
In addition to shortages of Chinese ilmenite on international
markets, ilmenite exports from India this year have been hit
by government clampdowns on illegal beach sand mining in
Tamil Nadu, which has all but halted shipments from the
country’s top mineral sand-producing
Large-scale developments are on their way elsewhere in the
In August, UK-based Bluejay Mining Plc reported that auger
drilling was under way at Itelak, the largest target on its
Pituffik development in Greenland.
The company said that the drilling discovered deposits of
extremely pure ilmenite, leading the company to upgrade
expectations for the size of the reserve to 23.6m tonnes,
containing up to 8.8% ilmenite.
London brokerage SP Angel, which acts as nominated adviser to
Bluejay, was upbeat on prospects for the resource.
"The amazing thing about Pituffik is the apparent purity of
the ilmenite mineral sands and the near total lack of any other
material, particularly clay which bungs up processing at many
other mineral sands operations," the broker said in a
"In short, nature has done an amazing job in sorting out the
heavy mineral sands from the lighter material and this can be
very clearly seen from the air where rivers show plumes of
natural sand being washed down the shoreline to other beaches
leaving a mass of ilmenite sand on Bluejay’s
licences at Pituffik."
"We note, other beach sands in the region do not appear to
have similar areas of ilmenite concentration," SP Angel said.
In the US, the Natural Resources Research Institute (NRRI),
part of the University of Minnesota, announced in May that
high-quality TiO2 had been extracted using a proprietary
process, which the institute says is suitable for commercial
The pilot scheme, joint-funded by the Minnesota state
government and the University of Minnesota, yielded
pigment-grade TiO2 at up to 99.8% purity, processed from 10
tonnes of local ilmenite.
The technology potentially unlocks a massive band of
ilmenite deposits which run along the north-east edge of
Minnesota, including the Longnose deposit, owned by mining
junior American Shield Titanium Group and reported to be among
the largest and highest-quality ilmenite deposits in the
Drilling at Longnose indicates the presence of around 58m
tonnes ilmenite with 17% TiO2 content, according to the
Minnesota Minerals Coordinating Committee (MMCC).
The reserves have previously been seen as unusual due to the
high proportion of magnesium oxide in the ore, which is hard to
remove and compromises the whiteness of the finished
But the NRRI’s pilot demonstration was able to
produce high-purity TiO2 through its proprietary
*Conversions made September 2017
European health concerns
Suppliers of TiO2 for consumer applications are facing the
possibility of having to place health warnings on products
containing the chemical.
Concerns over the potential health effects of the pigment
have been around for decades, but the matter came back into
focus in June this year, when risk assessment body the European
Chemicals Health Agency proposed that TiO2 should be classified
as suspected of causing cancer when inhaled.
The assessment, which cited studies indicating that TiO2
caused tumours in rats, was prompted by a request from French
The recommendation was heavily criticised by the TiO2
industry. The Europe-based Titanium Dioxide Association noted
that "the data on which the French proposal relies shows
effects in rats, which are not reproducible in other species
such as mice or hamsters".
"Most importantly, there is no evidence of effects in humans
– where the industry has large amounts of data," it
The association also noted that the effect seen in rats was
not unique to TiO2, but is "common to many other substances
that are also poorly soluble".
"The amount of TiO2 that the rats were exposed to in the
studies referred in the proposal is far in excess of that to
which human workers would ever be exposed."
Speaking to IM in August, the British
Chemicals Federation noted that the proposed classification
would lead to products containing TiO2 being labelled as
"suspected of causing cancer", even in forms that could not
The BCA added that existing regulations also limit the amount
of particulates of any sort that can be exposed to.